Opening a Health and Fitness Facility
1. What are the first steps to starting your own fitness business?
As with starting any business you must start with a desire and willingness to take a chance and work hard to succeed. Starting a business is exciting but can also be extremely challenging. The phrase nothing ventured, nothing gained holds especially true in the fitness industry.
The first steps to starting your own fitness business are to identify what type of facility you want to own. Will it be a small boutique specialized facility, or will it be a 100,000 sq ft mega club sporting all the bells and whistles? Also, you must have a solid business plan that includes the structure of the company, name of the company, all of the legal requirements of the company, and most importantly, an educated staff of employees willing to see your vision into a reality.
2. How much does it cost to open a health club?
According to Entrepreneur, the average cost of opening a gym is $10,000 to $50,000. Of course these numbers represent the middle of the road, and in reality your health and fitness business could cost as much as millions of dollars or as little as just a few thousand dollars based on the type facility you are looking to open. Be prepared to keep all of your financing options open. A combination of personal funds, bank loans, equipment leasing and partnerships can all play a role in covering the costs of opening your facility.
3. How much do gym owners make?
According to Indeed, the average gym owner makes $57,000 annually. Many gym owners not only take a salary but also receive many additional perks and benefits that can increase the compensation package to well over $75,000 annually.
4. Can I start a fitness facility with no money?
On rare occasions you can start a fitness facility with no money. Based on your experience and network, you may be able find an investor or landlord willing partner with you . Other opportunities can open up to you as well, such as closed facilities, corporate facility partnerships, and established fitness facilities interested in leasing their floors. Keep in mind that having some money to start ensures you a better chance of succeeding versus starting with no money.
5. What is required to run a fitness center?
To properly run a fitness center you need to address several areas of business expertise. To start you will need to decide whether to incorporate or operate as a sole proprietor. Then you will need to obtain the proper business licenses, insurance, and meet state registration requirements. To complete this you’ll need to decide on a name for your fitness business, find and secure the right location for your company, and purchase fitness equipment. A well thought out business plan and secure financing will go a long way in helping you secure the right facility, purchase equipment, and hire a high quality staff.
6. Do I need a business plan?
Based on numerous studies, including one conducted by the Panel Study of Entrepreneurial Dynamics, it has been found that just the act of writing a business plan increase the chances that entrepreneurs would actually go into “business” by over 250%.
The act of writing a solid business plan will not only help you make important decisions about starting your business but it will also serve as a roadmap for the success of your fitness business.
7. How do I choose between a franchise and my own fitness business?
For many aspiring gym owners the decision to franchise or not to franchise can be very difficult. Those who want to work for themselves but lack specific knowledge in the fitness industry may find lots of success with franchising. Others who possess more industry experience may also consider the path of not franchising. In this case, gym owners may see more profit as they avoid franchise fees and royalties.
You may also make your decision based on your own personality. If you’re an entrepreneur who generally doesn’t follow rules and likes to add your own style to your business then you should probably stay away from franchising. Alternately, if you come from a more corporate background and like to follow a successfully proven set of guidelines then you should consider a franchise.
Selling Your Health and Fitness Facility
1. When is the right time to sell my fitness business?
If you’re asking this question then usually the right time to sell your business is now! Any successful business person will tell you that everything is for sale, for the right price. Operating your facility as if you are expecting a purchase offer each and every day is a great way to approach your business. The key to selling your business successfully is to sell at a time when your business is running as smooth as possible; your staff is trained and motivated, your profit centers are producing revenue, your fitness equipment is still state of the art, and you have a solid lease with the ability to extend. With these factors fulfilled you prove a financially strong business model and expect a higher offer.
2. How do I sell my health and fitness facility successfully?
If you want to successfully sell you health and fitness facility then you must prepare. Starting with the overall appearance of your facility; the equipment should be in good working order with all upholstery repaired, the facility must be clean and bright, locker rooms should be updated and spotless. In addition, your financials should be in order and up to date, including the current month. But most importantly, as the business owner, you must be mentally prepared to sell your baby. Many times in business we are faced with difficult decisions and to make an informed decision and profit we must separate from our emotions. Your number one focus should be finding the right person or company to take over your business. Finally, be sure to market your business confidentially or you risk a mass exodus of members and employees alike. It’s important to work with experienced professionals who understand the fitness niche specifically, as there are many special considerations involved in completing a successful deal which must be handled with care.
3. Do I sell my business with the real estate or separately?
It all depends! To sell a health and fitness business along with the real estate can be accomplished in a variety of ways. The circumstances surrounding the deal will dictate whether you can the business with the real estate. Some possible deals structures included selling as a total package (real estate + business), selling separately, or even selling the real estate alone and moving the business to another location. Your decision should be based on the overall return that you can expect in a timely manner. As with any business transaction, finding the right professionals to guide you is critical in achieving the optimal results.
4. How much is my business worth?
At the end of the day, a business is really only worth what a buyer is willing to pay. But to estimate your fitness company’s worth use this formula; your company value equals 3 times your yearly profit, plus the value of your equipment. So a business that makes $100,000 profit per year and has $75,000 worth of equipment would be worth $375,000.
($100,000 yearly profit x 3) + $75,000 equip. value = $375,0000
Keep in mind that not all valuations are performed the same way. Your business may be more or less valuable depending your location, current business trends, and if you choose to sell just the business or include the real estate as well. As always, you need to prepare and do your homework. Be realistic and honest with yourself when selling your business to determine the true value.